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Article

Getting the best of both worlds? Developing complementary equation-based and agent-based models

Abstract

We argue that building agent-based and equation-based versions of the same theoretical model is a fruitful way of gaining insights into real-world phenomena. We use the epistemological concept of “models as isolations and surrogate systems” as the philosophical underpinning of this argument. In particular, we show that agent-based and equation-based approaches align well when used simultaneously and, contrary to some common misconceptions, should be considered complements rather than substitutes. We illustrate the usefulness of the approach by examining a model of the long-run relationship between economic development and inequality (i.e., the Kuznets hypothesis).

Keywords: agent-based models, economic methodology, epistemology, equation-based models, social simulation,